orf see it - development of regional export promotion ... · ict sector as 2nd-largest land-based...

Transform to the power of digital

ORF SEE IT - Development of Regional Export Promotion Action Plan

IT Market Analysis Norway

April, 2014

IT Market Analysis Norway

Copyright © 2013 Capgemini Consulting. All rights reserved.

2

Agenda

1. ICT Market

2. Software Market

3. IT Services Market

4. IT Outsourcing

5. Key Success Factors for Exporting

3

Norway – Country Overview

4

Source: World Bank, OECD, Eurostat

2010 2011 2012

Population (Mio) 4.9 5.0 5.0

GDP (Bn EUR) 311.85 315.59 325.38

Real GDP/ Capita (EUR) 52,000 52,000 52,800

GDP Growth 0.5 1.2 3.1

Trade Balance of Payments (%GDP) 11.9 12.8 14.4

Inflation Rate 2.4 1.3 0.7

Umemployment Rate 3.6 3.3 3.2

Norway - Key Economic Indicators

Norway – ICT market overview (1/3)

5

*Estimated values Source: EITO 2013

Total ICT market value by segment 2010 – 2014 (in € billion)

Segment 2010 2011 2012 2013 2014*

IT Equipment 1.4 1.5 1.6 1.6 1.6

Software 1.6 1.7 1.8 1.9 2.0

IT Services 4.3 4.5 4.5 4.7 4.9

Telecommunication Equipment 1.0 1.1 1.2 1.3 1.3

Telecom Services 3.6 3.6 3.6 3.7 3.7

Total ICT 11.9 12.3 12.8 13.2 13.4

Total ICT market growth rates by segment 2011 – 2014 (in %)

Segment 2011 2012 2013 2014*

IT Equipment 7.7% 4.6% 0.1% -1.3%

Software 4.9% 5.6% 5.7% 5.8%

IT Services 2.6% 1.6% 3.8% 4.2%

Telecommunication Equipment 13.7% 12.3% 4.2% 0.8%

Telecom Services 1.0% 1.6% 2.5% -1.3%

Total ICT 3.9% 3.5% 3.3% 1.9%

High share of IT Services and growing share of software

ICT sector as 2nd-largest land-based industry – war for talent due to skills shortages

Norway – ICT market overview (2/3)

6

ICT sector as 2nd-largest land-based industry by revenue:

─ Flagship industry

─ Workforce: 117,000 (4.8% of total workforce)

War for talent and skill shortages: job vacancies rose from 2,300 (in 2011) to 3,100 (in 2012)

─ shortages of engineers as well as skills shortages in software development and data technicians

─ 17% of ICT firms had to recruit persons with an educational background other than that initially required

─ Average annual salaries increased by 5%

many companies in the ICT industry supply modular and software solutions (including data, customer relations, administrative, and financial management systems), to virtually all private and public sectors

range of available products includes satellite communications systems, global positioning systems, mobile phone systems, network management systems, transmission systems, and fiber optic technologies.

Norwegian companies have also been pioneers in the fields of telemedicine and remote learning. Advanced public-sector solutions are starting to find international buyers

Overview

Source: Statistics Norway Website, EITO 2013

ICT market values by segment (in € billion)

ICT market shares by segment (in %)

12%

14%

36%

10%

28%

IT Equipment

Software

IT Services

Telecommunication Equipment

Telecom Services

0

1

2

3

4

5

6

2010 2011 2012 2013 2014*

IT Equipment

Software

IT Services

Telecommunication Equipment

Telecom Services

Agenda

1. ICT Market

2. Software Market


4. IT Outsourcing


7

Norway – Software market overview (1/2)

Application software products as the largest, and SaaS as the fastest growing segment

8

*Estimated values Source: PAC 2013

Total software market value by segment 2010 – 2017 (in € billion)

Segment 2011 2012 2013 2014* 2015* 2016* 2017*

Infrastructure software & platforms

0.4 0.4 0.4 0.4 0.4 0.5 0.5

Application software products 0.8 0.9 0.9 0.9 1.0 1.0 1.0

SaaS 0.0 0.0 0.0 0.1 0.1 0.1 0.1

Total software 1.3 1.3 1.4 1.4 1.5 1.6 1.6

Total software market growth rates by segment 2011 – 2017 (in %)

Segment 2012/11 2013/12 2014/13* 2015/16* 2016/17* 2017/16* CAGR

Infrastructure software & platforms

3.8% 4.0% 3.7% 2.9% 2.2% 1.6% 2.6%

Application software products 4.2% 4.3% 4.0% 3.7% 3.4% 3.1% 3.6%

SaaS 24.6% 24.9% 24.0% 22.8% 21.8% 20.7% 22.3%

Total software 4.5% 4.7% 4.5% 4.2% 3.9% 3.6% 4.0%

Software market is expected to grow by a CAGR of 4% in the interval 2011 – 2017

Norway – Software market overview (2/2)

9

Software market value by segment (in € billion)

Software market growth by segment (in %)

The Norwegian software market grew by 4.7% in 2012 to reach a value of EUR 1.3 billion; in 2013 the software market reached a market value of EUR 1.4 billion

The performance of the market is forecasted to accelerate, with an anticipated CAGR of 4% for the five-year period 2012 – 2017

Category Segmentation:

The general business productivity and home use applications segment was the market's most lucrative in 2011, with total revenues of EUR 277.6 million, equivalent to 22.9% of the market's overall value

The network and database management segment contributed revenues of EUR 268.5 million in 2011, equaling 22.1% of the market's aggregate value

Geography segmentation

Norway accounts for 1.8% of the European software market

Overview

Source: PAC 2013, Software in Norway, Marketline, 2012 *Estimated values

0.4 0.4 0.4 0.4 0.4 0.5 0.5

0.8 0.9 0.9 0.9 1.0 1.0 1.0

0.0 0.0 0.0 0.1 0.1 0.1 0.1

0,0

0,5

1,0

1,5

2,0

2011 2012 2013 2014* 2015* 2016* 2017*

SaaS

Application Software Products

Infrastructure Software & Platforms

0%

5%

10%

15%

20%

25%

30%

Infrastructure Software & Platforms

Application Software Products

SaaS

Highly competitive Software providers landscape – Global Players face serious competition

Norway – IT Software market key players

10

IT Software Providers in Norway

Source: Capgemini Consulting Analysis

Application deployment and development tools as one key trend

Norway – IT Software market key trends

11

Source: Number and Trends, ICT Market Monitor 2013; The Dutch Software Sector, Survey 2010

Efficiency

Expenditures on packaged software focused on applications for improving IT efficiencies and infrastructure management

Importance of verticals

The applications market is dependent on the buying patterns of large enterprises in specific sectors (banking, oil/gas, telco, etc.) and the changing fortunes of the country’s SME segment

ADDT

Efforts to better manage costs, improve IT infrastructure efficiencies, and provide more intelligence for business operations drove new spending on application deployment and development tools (ADDT)

Agenda

1. ICT Market

2. Software Market


4. IT Outsourcing


12

Norway – IT Services market overview (1/2)

Infrastructure-Related Services as the largest segment by value – closely followed by Application-Related Services

13

*Estimated values Source: PAC 2013

Total IT Services market value by segment 2010 – 2017 (in € billion)

Segment 2011 2012 2013 2014* 2015* 2016* 2017*

Infrastructure-Related Services 1.9 1.9 2.0 2.1 2.1 2.1 2.2

Application-Related Services 1.4 1.4 1.5 1.6 1.6 1.7 1.7

BPO 0.2 0.2 0.2 0.2 0.3 0.3 0.3

Total IT Services 3.5 3.6 3.7 3.9 4.0 4.1 4.2

Total IT Services market growth rates by segment 2011 – 2017 (in %)

Segment 2012/11 2013/12 2014/13* 2015/16* 2016/17* 2017/16* CAGR

Infrastructure-Related Services 2.3% 2.7% 2.7% 2.4% 2.0% 1.6% 2.2%

Application-Related Services 4.3% 4.8% 4.4% 4.3% 3.8% 3.3% 4.0%

BPO 6.6% 7.5% 7.9% 8.6% 8.7% 8.6% 8.5%

Total IT Services 3.3% 3.8% 3.7% 3.6% 3.2% 2.8% 3.3%

IT Services market is expected to keep growth pattern with a CAGR of 3.3% for the interval 2011 – 2017

Norway – IT Services market overview (2/2)

14

IT Services market value by segment (in € billion)

IT Services market growth by segment (in %)

Infrastructure-Related Services remain the largest segment (by value) but Application-Related Services, as well as BPO are becoming more important due to larger growth rates

A considerable share of large outsourcing (IT and BPO) deals will be forthcoming from both the public and the private sectors, where the energy and oil and gas industries in particular are performing very well

─ Importance of verticals (industries)

Overview

Source: PAC 2013, Software in Norway, Marketline, 2012 *Estimated values

0%

2%

4%

6%

8%

10%

Infrastructure-Related Services

Application-Related Services

BPO

1.9 1.9 2.0 2.1 2.1 2.1 2.2

1.4 1.4 1.5 1.6 1.6 1.7 1.7

0.2 0.2 0.2 0.2 0.3 0.3 0.3

0

1

2

3

4

5

2011 2012 2013 2014* 2015* 2016* 2017*

Infrastructure-Related Services Application-Related Services BPO

Agenda

1. ICT Market

2. Software Market


4. IT Outsourcing


15

Norway – IT Outsourcing market value by segments (in € million)

16

*Estimated values Source: Gartner 2013

Segments & Sub-segments 2010 2011 2012 2013 2014* 2015* 2016*

Cloud Services

Infrastructure as a Service (IaaS)

Cloud Compute Services 7 10 16 22 33 45 54

Cloud Print Services 0 0 0 0 0 0 0

Storage as a Service 4 5 6 8 10 12 12

Total (Cloud Services) 12 16 22 31 43 58 67

Infra-structure Outsourcing

Data Center Outsourcing Data Center Outsourcing 674 686 689 692 695 698 699

End User Device Outsourcing Desktop 259 258 259 260 262 268 278

Mobile 14 29 33 38 42 46 50

Enterprise Network Outsourcing 412 424 429 436 445 454 464

Help Desk Outsourcing 50 52 52 53 54 55 57

Infrastructure Utility Services 93 125 141 159 183 211 240

Total (Infrastructure Outsourcing) 1,502 1,574 1,603 1,638 1,681 1,731 1,788

Applications Outsourcing

Commercial Application Outsourcing 129 136 137 140 143 146 151

Custom Application Outsourcing 81 82 83 84 86 88 91

Total (Applications Outsourcing) 210 217 220 224 229 234 242

Total (IT Outsourcing) 1,724 1,807 1,845 1,893 1,954 2,023 2,098

Norway – IT Outsourcing market growth by segments (in %)

17

*Estimated values Source: Gartner 2013

Segments & Sub-segments 2011 2012 2013 2014* 2015* 2016*

Cloud Services

Infrastructure as a Service (IaaS)

Cloud Compute Services 50.5% 41.5% 43.7% 49.6% 36.2% 19.6%

Cloud Print Services 13.2% 10.0% 14.7% 13.1% 11.0% 10.2%

Storage as a Service 20.4% 13.1% 31.7% 23.1% 19.6% 3.3%

Total (Cloud Services) 40.2% 33.2% 40.3% 43.3% 32.6% 16.6%

Infra-structure Outsourcing

Data Center Outsourcing Data Center Outsourcing 6.9% -4.8% 0.6% 0.5% 0.4% 0.2%

End User Device Outsourcing

Desktop 4.9% -5.1% 0.6% 1.0% 2.0% 4.0%

Mobile 107.6

% 9.1% 14.2% 11.6% 8.8% 9.0%

Enterprise Network Outsourcing 8.0% -4.1% 1.9% 2.0% 2.0% 2.2%

Help Desk Outsourcing 9.0% -4.3% 1.6% 1.8% 1.9% 3.0%

Infrastructure Utility Services 41.2% 6.4% 13.6% 14.5% 15.4% 14.0%

Total (Infrastructure Outsourcing) 11.5% -3.4% 2.6% 2.8% 3.2% 3.5%


Commercial Application Outsourcing 10.0% -3.9% 2.1% 2.2% 2.3% 3.4%

Custom Application Outsourcing 5.9% -4.0% 1.9% 2.2% 2.2% 3.4%

Total (Applications Outsourcing) 8.5% -3.9% 2.0% 2.2% 2.3% 3.4%

Total (IT Outsourcing) 11.4% -3.0% 3.1% 3.6% 3.9% 3.9%

Infrastructure as a Service as the key driver of Cloud Services’ growth

Norway – IT Outsourcing market overview

18

IT Outsourcing market value by segment (in € million)

IT Outsourcing market growth by segment (in %)

Total IT Outsourcing market expected to grow steadily between 3-4% per year until 2016

Infrastructure Outsourcing as the largest segment (by value)

Infrastructure and Application Outsourcing face a moderate growth, after a decline in 2012

Cloud Services with a constant double-digit growth until 2016, but remaining a relatively small segment (by value)

Overview

Source: Gartner 2013 *Estimated values

12 16 22 31 43 58 67

1.502 1.574 1.603 1.638 1.681 1.731 1.788

210 217 220 224 229 234 242

0

500

1000

1500

2000

2500

2010 2011 2012 2013 2014 2015 2016


Infrastructure Outsourcing

Cloud Services

-10%

0%

10%

20%

30%

40%

50%

2011 2012 2013 2014 2015 2016

Cloud Services

Infrastructure Outsourcing


Norway – IT Outsourcing market trends (1/3)

19

69 60

98

49 39

22

48

27 28

60 48

27

Denmark Finland Norway Sweden

Web Mobile Enterprise

59

54

41 43 38

42

57 54


Multi-source Singlesource

41

69

31

45

20 28 31 30

18 16 11

18 16 10


0-49K 50-199K 200-499K 500K+

8 8 8

36

53

41 39


Gov Professional services IT Software Digital Media Mobile Telecom

Software industry as main outsourcing industry – Web services are the ones mostly outsourced

1. Information Technology Outsourcing Source: Pan-European IT Outsourcing Intelligence Report, 2011

EUR

IT Outsourcing Projects Value, 2011 (EUR) Top 3 Outsourced Project Areas, 2011 (%)

Top 3 Industries That Most Actively Use ITO1 Services, 2011 (%) Multi-sourcing vs. single-sourcing, 2011 (%)


20

58 56

63 69

48

66 61 56 69

49 56

70


Experience in similar projects Innovative business model

Successful pilot project Low service rates

Positive references from peers

79 69

99

78 72

99

56

76

44

69 70 56


Language skills IT talent pool

Cultural proximity Positive referenes from peers

Low costs Political stability

47

58

28 31 34

42 42

32

12 12 12

28


Project (FP, T&M) Managed / Own Team Dedicated Development Center

38 28

55

40 36

85

55

38

22 13,5

27 18


Online research References from peers / partners Response to vendor's telemarketing call / introductory email RFP / RFQ release / tender

Experiences in similar projects and references from peers are key success factors for outsourcing relationships

Source: Pan-European IT Outsourcing Intelligence Report, 2011

Top 3 IT Outsourcing Destination Selection Criteria, 2011 (%) Top 3 IT Outsourcing Partner Search Tactics, 2011 (%)

Top 3 IT Outsourcing Partner Selection Criteria, 2011 (%) Top 3 IT Outsourcing Engagement Models, 2011 (%)


21

57 49

38

57

85

52 55

28

41 41 37 29


Dedicate more management resources Increase face-to-face communication

Extend project deadlines Revise vendor management

Dedicate more IT resources Consider a different vendor

38 29 29

69 69

28 39

42

57

34 42

29


Lack of vendor's resources Change management Vendor misunderstands our goals Poor communicator with vendor's PM Delays in project delivery Poor PM on vendor's side Cultural difference

54 67 66 49 47

38 50

39 34 50

59 50


Companies don't want to lose project control Companies had negative ITO experience in the past Companies are afraid of hidden agenda Companies don't want to create shared environments Companies think they're yet too small to outsource Companies are concerned about product quality

71 79 50

59 98 68 49

81 78 78 98 69


Lack of domestic resources Pressure from investors / C-suite to cut costs Slow time to market In-house IT team has too many core issues to handle Capital funds need to be made available IT risks are to be shared with partners

Successful ITO-relationships require project management and communication skills

Source: Pan-European IT Outsourcing Intelligence Report, 2011

Top 3 IT Outsourcing Challenges, 2011 (%) Top 3 Responses to Challenges, 2011 (%)

Top 3 Factors Preventing Companies from IT Outsourcing, 2011 (%) Factors Likely To Influence Companies’ IT Outsourcing, 2011 (%)

Web services are in high demand

Norway – IT Outsourcing market key trends

Ca. 40% of the ICT companies outsource certain tasks, thereof 40% of the companies have more than 3 years of outsourcing experience

Outsourcing destinations: Nearshore (60%), Offshore (40%)

Outsourced areas of expertise: Web (e.g. Web 2.0, Java, Microsoft ASP, etc.), Mobile, Enterprise (e.g. J2EE, C#, etc.), SaaS / Cloud (20%)

Top 3 outsourcing factors: shortage of domestic IT skills and resources, reduce operation costs, focus on core competence

Factors in terms of their importance for choice of outsourcing destination:

– very important: available IT talent (100%), language skills (75%), political stability (60%), cultural proximity and economic stability (both 50%)

– Somewhat important: positive reference from peer companies (75%), legal system and IP protection maturity (75%)

40% of the ICT companies find outsourcing partners through peer references

22

Source: IT Sourcing Europe (2011); http://de.slideshare.net/itsourcingeurope/norway-ito-intelligence-report-2012

Median salaries (per year) by certification – ranging from EUR 50,000 to 80,000

Norway – Salary overview by certifications

€1K €50.001K €100.001K

81.560 €

69.936 €

36.858 €

58.073 €

51.541 €

55.502 €

39.523 €

49.838 €

52.974 €

53.645 €

Certified Professional Engineer (PE)

Certification

23

Microsoft Certified Professional (MCP)

Cisco Certified Network Associate (CCNA)

Engineer in Training (EIT)

Sun Certified Java Programmer (SCJP)

Microsoft Certified Systems Engineer (MCSE)

Project Management Professional (PMP)

Project Management Certificate

Information Technology Infrastructure Library (ITIL) Foundation

Cisco Certified Internetwork Expert (CCIE) Source: Payscale.com

Agenda

1. ICT Market

2. Software Market


4. IT Outsourcing


24

Norway – Key Success Factors for Exporting

25

Marketing & Positioning

Vertical specialization (industry focus)

Specialization on SME segment

Ability to communicate customer value and ROI

A professional web presence and good market visibility

Innovative business model

Investing into market intelligence

Norwegian / international References (Norwegian companies demand for references from peers)

Competitive and transparent pricing: bid for small projects (<200,000€)

Focus on specific nearshoring / offshoring services (e.g. web design / development)


26

Quality & Processes

Quality management standards, methodologies and process models: CMMI, ISO, RUP, Agile Methods, SCRUM, Six Sigma, ITIL

Customer education (SMEs): how to use offshoring effectively by applying suitable models and processes

Knowledge of evaluation, selection and purchasing procedures

Compliance with quality, deadlines and budget requirements

Certifications: technologies, project management, quality management

Professional project management: continuous work tracking and reporting

Professional HR management (motivation, skills management): availability of top IT talent

Provision of dedicated teams

Norwegian companies seek an IT talent pool: University alliances and cooperation with academia in order to ensure skill alignment and sustainable recruitment


27

Technology & Capabilities

Ability to support client with evaluation, project preparation and requirement specification; technical documentation

Measures to ensure security and data protection

Integrated outsourcing services for SMEs: combination of IT consulting and outsourcing services with trainings and success-based fees and a local key account

Target industries: Software, Mobile

Most sought-after skills:

– web services, mobile, enterprise, Saas / Cloud

– Software developers and Data Technicians

Language skills and cross-cultural trainings: English language capabilities

High communication-skills required for collaboration

Transform to the power of digital

Contact:

Lucas von Zallinger

E-Mail: [email protected]

orf see it - development of regional export promotion ... · ict sector as 2nd-largest land-based...

Documents